June 30, 2005

UK OSS developer scores big with VCs

Author: Tina Gasperson

Scotland software developer LogicalWareannounced last week it has secured more than half a million dollars in venture capital to market and expand development on its open source email management software, mailmanager. It claims to be the first open source project in the United Kingdom to receive VC funds.LogicalWare CEO Andrew Veitch says it was no easy task to capture the attention of Sigma Innovation Fund, the firm that fronted a portion of the capital along with private investor Bill Dobbie. Much like the United States, the United Kingdom has a high rate of failure in tech company startups, and only about one in 300 is able to convince investors to write checks, according to Veitch.

But mailmanager has proven to be a popular piece of software because it helps companies deal with customer service-related email in a timely and organized fashion by prioritizing communications based on rules created by users. It also generates reports that help executives understand where the company's email messages are coming from, who is receiving them, and how they are handled.

Mailmanager is open source and freely available under the General Public License, but most business clients want to pay for it in order to receive installation and technical support, Veitch says. The majority of the company's business comes from the United States.

Veitch says one of the things LogicalWare will do with the cash infusion is to market the product more heavily in the United Kingdom and other countries through print advertising and more online ad purchases, which have proved successful for the company. "We ran one AdWords campaign for $20 and got a $200K sale from it," he says.

Veitch says that remaining true to its open source roots is a non-negotiable foundation for LogicalWare. "It would have been impossible to have developed our product without it being open source -- we didn't have enough money to fund development." The company is so loyal to the concept of open source that the open source definition is even written into its venture capital funding documents.

"It's very important to be proper open source. A lot of companies make it like a free trial. But it's not responsible to ask the community for help and then they're not getting the benefits of that."

Veitch, one of the founding members of the Open Source Consortium, has high hopes for the future of open source software in his country. "The United Kingdom has not been a leader in open source. Tony Blair launched his last election campaign at the Microsoft headquarters. Germany and France have embraced it in a far bigger way. But government policy is finally beginning to move in the direction of open source."

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